Up to yesterday all the guidebooks on the new gTLD’s and the general consensus was that ICANN would limit cross ownership of registrars and registries by to a certain minority position of somewhere between 2%-15%. (You can read about some the reaction in the domain world here).
So having a day to reflect on this move, I see it as only meaning one thing.
The big boys win and the small guys lose.
By removing the cross ownership restrictions you can have a company like Godaddy who already gets 50% of all new domain registrations, apply to operate the registry for many new gTLD’s and sell them only through Godaddy.com, not allowing any other registrar to resell those new gTLD’s.
In this case Godaddy would receive 100% of the retail price of the cost of registration.
They do more than cut out the middle man.
They deprive the middle man, the registrars from selling the products.
Of course by offering their own gTLD owned registry products they have less room or desire to sell other new gTLD’s owned by other companies.
So if a new TLD registry doesn’t have access to Godaddy.com because Godaddy is selling their own registry’s products the new TLD registry is not going to have access to 50% of the retail market.
To a company like Godaddy which not only would own the registry but would also control the retail channel, a new gTLD is worth so much more than to a company that would only operate the registry. So not only do these companies have more cash but they can spend more because the registry its just worth a lot more to them.
Lets play out the scenario where each of the top 10 registrars go out and apply to operate registries for their own TLD’s and decide only to sell those extensions on their registrar site
Every TLD not owned by one of the top 10 registrars would be effectively shut out of the retail market, having to depend on registrars controlling less than 20% of the market to sell their product.
Will it happen, I don’t know.
Could it happen?
After yesterday’s board action, the answer is yes.
Lets not just pick on Godaddy.com, which reportedly recently turned down an offer of between $1.5 BILLION to $2 BILLION dollars to sell, there are plenty of other companies that are popping champagne bottles at ICANN decision.
A company like Demand Media, which owns a top 10 registrar in Enom.com can do the same as we described with Godaddy.com.
Then there is VeriSign, which already operates the .com and .net registry.
$2.2 Billion dollars in cash.
There are registrars that are public companies like Tucows.com which is sitting on over $5 million in cash, and even publicly traded companies like Neustar, which provides back end services for many registries which is reportedly sitting on $380 million dollars in cash.
These large very profitable corporations can basically outspend and outbid the small entrepreneurial guys all day long, each time and everytime.
Under the guidebook when there is more than one applicant for the same gTLD, the winner will be determined by auction.
How would you like to have spent $185K in application fees for a TLD only to find yourself bidding against VeriSign, Godaddy and Demand Media for the right to run the registry?
I don’t like your chances.
“””Since ICANN was founded more than ten years ago as a not-for-profit, multi-stakeholder organization dedicated to coordinating the Internet’s addressing system, one of its foundational principles has been to promote competition in the domain name marketplace while ensuring Internet security and stability.”
“The expansion of the generic top-level domain (gTLD) space will allow for a greater degree of innovation and choice.”
“In a world with over 1.6 billion Internet users – and growing – diversity, choice and competition are essential to the continued success and reach of the global network.”
It sounds nice but you can only foster competition if there are competitors.
In one unexpected resolution the ICANN board just dramatically reduced the competition.
This decision almost insures that there will be less competitors for TLD’s
The whole new gTLD system now seems to have been in all practicality thrown into the hands of only a few large companies.
So There won’t be more competition, just more extensions controlled by a few huge companies many of which own the distribution channel.
Instead of hundreds of small startup’s going for a TLD extension which would bring a ton of new players into the domain industry, I predict your going to see a few large corporations controlling the registry and the distribution channel.
Big guys Win.
Small Guys Lose.
One more thing to keep in mind, is that as existing registries want to be treated under the same rules as the new gTLD’s registrar’s which means big changes maybe ahead for existing extensions.